Horton Corporation Is a 100 Percent Owned Canadian Subsidiary of Cruller

Horton Corporation is a 100 percent owned Canadian subsidiary of Cruller Corporation, a U.S. corporation. During the current year, Horton paid a dividend of C$630,000 to Cruller. The dividend qualifies for the 100 percent dividends received deduction. The dividend was subject to a withholding tax of C$38,000. Assume an exchange rate of C$1 = $1. Cruller reported U.S. source taxable income of $2,400,000 before considering the dividend received from Horton Corporation. Compute the tax consequences to Cruller as a result of this dividend.

A) Taxable income of $3,030,000, net U.S. tax of $598,300, and FTC carryover of $0
B) Taxable income of $3,030,000, net U.S. tax of $636,300, and FTC carryover of $38,000
C) Taxable income of $2,400,000, net U.S. tax of $466,000, and FTC carryover of $0
D) Taxable income of $2,400,000, net U.S. tax of $504,000, and FTC carryover of $0